Hello everyone and welcome to this Ethics Alert blog which will discuss whether a lawyer could be potentially liable for another lawyer’s legal malpractice (and potential Bar rule violations) by making a referral. The short answer is yes. Of course, under the Florida Bar lawyer disciplinary rules and most, if not all, jurisdictions, it is certainly ethical for a lawyer to refer a case to another lawyer and receive a referral fee; however, there are certain requirements under the rules and the referring lawyer might be held liable for any malpractice by the referral lawyer.

In Noris v. Silver, 701 So. 2d 1238 (Fla. 3rd DCA 1997), which is here: http://www.legalmalpracticelawreview.com/wp-content/uploads/sites/271/2012/03/Noris.pdf, the plaintiff was injured when a vehicle struck his bicycle in Chicago, Illinois. The plaintiff contacted an appellate attorney in Florida (Silver) who did not handle personal injury cases. The Florida lawyer then referred the matter to another lawyer (Falk) to whom he had previously referred cases and received a referral fee. The fee agreement with the referral lawyer did not disclose a fee arrangement with the referring lawyer, which violated Florida Bar Rule 4-1.5(g). The referral lawyer then failed to file the case before the expiration of the Illinois two-year statute of limitation for personal injury claims and the client sued the Illinois lawyer and the referring Florida lawyer for malpractice.

The opinion stated: “In the instant case, there is a genuine issue of material fact as to whether Silver retained a financial interest in plaintiff’s personal injury case by entering into an express or implied agreement to divide the legal fee.” “This issue of fact is material because pursuant to Rule Regulating The Florida Bar 4-1.5(g), if Falk and Silver agreed to divide the attorney’s fee, Silver would be liable for the malpractice committed by Falk.”

“Attorneys in different firms may divide fees under two circumstances: first, if the ‘division is in proportion to the services performed by each lawyer,’ R. Regulating Fla. Bar 4-1.5(g)(1); and second, if the client agrees in writing and the agreement discloses “the basis upon which the division of fees will be made,’ R. Regulating Fla. Bar. 4-1.5(g)(2). Moreover, when fees are divided pursuant to Rule 4-1.5(g)(2), ‘each lawyer assumes joint legal responsibility for the representation….’ Therefore, if Silver and Falk agreed to divide the attorney’s fee, Silver would be liable for the malpractice committed by Falk.” (emphasis added).

“It is true that if Falk had recovered attorney’s fees, Silver could not have enforced the purported oral agreement against Falk since the agreement did not comply with Rule 4-1.5(g)(2). See Chandris, S.A. v. Yanakakis, 668 So. 2d 180, 185 (Fla. 1995). However, we find that the failure to comply with Rule 4-1.5(g) cannot be used to shield a referring attorney from a legal malpractice claim made by a client. (emphasis added). To hold otherwise would allow attorneys to thwart their responsibility to a client by intentionally disregarding the Rules Regulating The Florida Bar. This cannot be condoned. It would also be unfair to lawyers who comply with Rule 4-1.5 to allow an avenue of escape for those who do not. Accordingly, we hold that if Falk and Silver agreed to divide the attorney’s fees, then Silver is legally responsible for the malpractice committed by Falk.” (emphasis added).

“We point out that in order for the plaintiff to prevail, the plaintiff must prove that there was an express or implied agreement between the referring attorney, Silver, and the working attorney, Falk, to divide the legal fee. The plaintiff can prove this by showing that there was an express agreement for division of the fee. Alternatively, plaintiff can show that there was an implied agreement, for example by showing a past course of dealing whereby it was understood between the two attorneys that a fee would be paid in exchange for referrals. When the summary judgment record is read in the light most favorable to the plaintiff as nonmoving party, the evidence supports the existence of an implied agreement for division of the fee in this case.”

Bottom line: This case involved a lawyer who referred a personal injury matter which occurred in another state to a lawyer who practiced in that state. In Chandris v. Yanakakis, the Florida Supreme Court stated that a contingent fee agreement between a Florida lawyer and an out of state law firm in a Florida case lawyer is void. The opinion stated: “We have determined that the requirements for contingent fee contracts are necessary to protect the public interest. Thus, a contract that fails to adhere to these requirements is against public policy and is not enforceable by the member of The Florida Bar who has violated the rule.” (Emphasis added). The opinion is here: http://archive.law.fsu.edu/library/flsupct/82934/op-82934.pdf.

Lawyers must be aware that, in Florida (and most, if not all jurisdictions), if a matter is referred to another lawyer and the referring lawyer expects to receive a referral fee, there must be a written fee agreement which discloses “the basis upon which the division of fees will be made” and “each lawyer assumes joint legal responsibility for the representation.”

Be careful out there!

Disclaimer: this Ethics Alert is not an advertisement and does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Hello and welcome to this Ethics Alert blog which will discuss the recent approval by The Florida Bar’s Board of Governors (BOG) of an amendment to Florida Bar Rule 4-1.5(f) related to extraordinary liens in contingency matters. I previously blogged about the proposed revisions to Bar Rule 4-1.5(f) in my 6/6/13 and 9/5/13 Ethics Alerts.

At its meeting on December 4, 2015, the BOG waived second reading of the proposed rule and took final action and the proposed rule amendment will be filed in the existing case: In Re: Amendments to Rule Regulating The Florida Bar 4-1.5 – Fees and Costs for Legal Services, Case No. SC14-2112 on January 15, 2016, pursuant the Supreme Court’s order in that case.

The BOG had previously approved an amendment to the rule allowing the retention of attorneys to handle medical and other liens under a reverse contingency fee with the consent of the client; however, the Florida Supreme Court rejected that rule amendment and opined that it is the responsibility of the lawyer as part of the original contingency contract to resolve the liens.

The rule amendment that was approved by the BOG on December 4, 2015 addresses the use of lien modification attorneys at the end of a personal injury or wrongful death case to handle negotiations over extraordinary liens.

Under the proposed amendment, attorneys can be employed in extraordinary cases with full disclosure and written approval of the client and with a judge’s approval. The judge would also be authorized to review and adjust the fees both of the main tort attorney and attorneys handling the liens.

Bottom line: As I previously stated, it is the general practice of lawyers in Florida to resolve client liens on behalf of the client as part of the representation; therefore, this revision will not generally impact lawyers in most cases; however, if there are extraordinary circumstances, the proposed rule revision would require the client to give written approval the retention of the attorney to handle the extraordinary liens. A judge would also have to give approval and would be authorized to review and adjust the fees both of the main tort attorney and attorneys handling the liens.

Be careful out there!

Disclaimer: this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.